"Rent is throwing money away" is one of the most repeated pieces of financial advice, and it's also incomplete, because it compares a monthly rent payment to a monthly mortgage payment as if those were the only two numbers that mattered. Buying carries several costs renting doesn't, and renting frees up capital that buying ties up, both sides of that ledger need to be counted for the comparison to mean anything.
The costs a simple mortgage-vs-rent comparison misses
A mortgage payment is only part of owning a home. Property tax, homeowner's insurance, routine maintenance (typically estimated at 1-2% of the home's value annually), and eventual larger repairs (a roof, an HVAC system) all add real ongoing cost that a rent payment simply doesn't carry, since a landlord absorbs those under a rental agreement. On the other side, a down payment is a large sum of money that, if you rented instead, could stay invested and keep earning returns instead of being locked into home equity, which is real money even though it doesn't show up as a monthly bill.
Buying also carries significant transaction costs on both ends, closing costs when purchasing and agent commissions when eventually selling, that don't apply to renting at all. These one-time costs matter more the shorter you expect to stay in the home, since they need to be amortized over fewer years of ownership to "pay for themselves" versus renting.
Why the time horizon changes the answer
Because buying's upfront costs (down payment, closing costs) are fixed regardless of how long you stay, but get spread over the years you own the home, the breakeven point between renting and buying usually sits somewhere in the 3-7 year range for a typical purchase, buy and sell sooner than that and the transaction costs alone often outweigh whatever equity was built. Stay well beyond the breakeven point, and buying typically wins, since rent tends to rise over time while a fixed-rate mortgage payment doesn't, and the accumulated equity becomes a real asset.
This is exactly the calculation the Rent vs. Buy Calculator runs, comparing the total cost of renting (including what the down payment would have earned if invested) against the total cost of owning (including tax, maintenance, and transaction costs) over your specific expected time horizon, rather than relying on a rule of thumb that doesn't account for your actual numbers.
Before assuming buying is the goal
None of this means renting is secretly always better, in markets with strong home price appreciation and long expected stays, buying frequently wins by a wide margin. It means the comparison needs the full cost picture on both sides. If you're specifically checking whether a target home price fits your budget once taxes and insurance are included, the Home Affordability Calculator and Mortgage Calculator fill in that side of the picture before the rent-versus-buy comparison even begins.